Hostess seeks OK for bankruptcy auctions

JacquelinePalank

Hostess Brands Inc. on Monday will seek bankruptcy-court approval to put many of its beloved brands on the auction block in coming weeks, including Twinkies and Ho Hos.

The White Plains, N.Y., bankruptcy court is set to consider three auction proposals from the liquidating baker, all of which have stalking horses lined up to lead off the bidding at auctions Hostess wants to hold in March.

Private-equity firms Apollo Global Management LLC and Metropoulos & Co. have teamed up to bid $410 million for most of Hostess's cakes business, including the Twinkie, Dolly Madison, Ho Hos and Ding Dongs brands. The bid also covers five bakeries and certain equipment.

Hostess wants to pay the private-equity firms a $12.3 million breakup fee if they lose at the March 13 auction. The company is further proposing a March 19 sale hearing for the court to approve the winning bid.

Also on Monday's agenda are separate auction proposals for Hostess's Drake's brand and several bread brands, including Grandma Emilie's and Sweetheart.

McKee Food Corp., the maker of Little Debbie snack cakes, has submitted a $27.5 million bid for the Drake's brand and equipment.

United States Bakery Inc., also known as Franz Family Bakery, is offering $28.85 million for the bread brands plus four bakeries, 14 depots and equipment.

Hostess would see both bids be put to the test at a March 15 auction and the winning bids subject to court approval at a March 19 sale hearing.

The company has already won court approval to send five key brands, including Wonder and Nature's Own breads, as well as 20 plants and 308 depots, to a Feb. 28 auction.

Flowers Foods Inc.
FLO, +0.79%
which makes Tastykakes and Nature's Pride breads, is offering up to $360 million in cash for theses assets. It also bid $30 million for Hostess's Beefsteak rye bread brand.

On Thursday, the Manhattan court will consider the outline of a plan to pay MF Global Holdings Ltd.'s
MFGLQ
creditors.

A creditor group including Silver Point Capital, Cyrus Capital Partners LP and Knighthead Capital Management LLC, which owns about 65% of MF Global's $2.2 billion in unsecured debt, filed the plan last month. It proposes a 12% to 42% recovery for the holders of $1 billion in unsecured bonds and a 27% to 80% recovery for the holders of $1.2 billion in loan debt.

The creditors behind the plan say their recovery estimates are "conservative" and that creditors may be paid more.

The plan outline must be approved before creditors may begin voting on the plan and before the court can consider the plan itself.

The plan doesn't cover the customers of MF Global's brokerage unit, which have been recovering most of their money in a separate liquidation proceeding.

On Friday, School Specialty Inc. will seek court approval to put itself on the auction block.

The educational supply company has a leading bid lined up from lender Bayside Capital, which has offered to forgive $95 million in debt in exchange for the assets rather than pay cash.

School Specialty is asking the Wilmington, Del., court to declare Bayside's offer the stalking-horse bid and to also approve its auction timeline. It's seeking a March 19 bid deadline, March 25 auction and March 27 sale hearing--a timeline that's a condition of Bayside's $50 million bankruptcy loan.

The company also faces an April 11 deadline to close a sale, otherwise it will risk defaulting on the bankruptcy loan.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.